Guest Column by Jim Krueger

Freeborn-Mower Cooperative Services is a locally owned, locally controlled and not-for-profit electric cooperative. A hallmark of our business model is direct accountability to the member-owners — that is, those receiving electric service.

Therefore, it is through this lens that I am responding to the recent announcement of the Clean Power Act announced by the Environmental Protection Agency.

The EPA put forth an aggressive plan requiring carbon emissions from existing power plants be slashed a nationwide average of 30 percent from 2005 levels by 2030. Following a 120-day comment period, the plan is scheduled to go final in June 2015. At that time, each state will be required to prepare a state implementation plan for compliance. This could include a combination of plant upgrades, plant closures, plant conversions to natural gas, investments in renewable energy and energy efficiency.

To those of us charged with the responsibility to provide electricity, the EPA plan raises two areas of concern — reliability and cost.

Coal-fired power plants supply the bulk of the base-load electricity generated in our region. These power plants steadily and dependably meets basic electric load requirements on a consistent 24/7 basis. Domestic and abundant coal became the workhorse of the electric utility industry due, in part, to federal policies in decades past that strongly favored its development. Given the fact that electric generating plants are designed for several decades of service, our dependence on coal today should come as no surprise.

A large number of coal-fired power plants, especially in the Midwest, are expected to be retired during the next few years because they will no longer be economically viable to operate or retrofit under the EPA restrictions.

Converting coal-fired power plants to natural gas is very expensive and also requires infrastructure expansion of pipelines. Concerns also loom over the impact that a “flight to gas” in the utility industry will have on market prices and natural gas supplies.

Dairyland Power Cooperative supplies the wholesale electrical requirements of Freeborn-Mower and 24 other distribution cooperatives, along with 17 municipal utilities in a four-state service area.

In addition to its coal-fired generation, Dairyland also owns or purchases a variety of renewable generation including hydroelectric, wind, landfill gas, biomass, animal waste and solar. Dairyland is committed to developing renewable energy and is ahead of all current state mandates in that respect.

These renewable energy sources, however, will simply not meet the capacity or reliability levels required to meet the system’s base-load energy needs. Renewable energies require infrastructure development to bring it into the power grid. The wind may be free, but harnessing it is not.

At Freeborn-Mower, we recognize that energy efficiency is important. For many years, Freeborn-Mower and Dairyland have offered several programs promoting energy efficiency. However, conservation and energy efficiency improvements alone are insufficient to offset growing energy demands. While our industry uses load management technology to help curb peak demand for electricity, this does not eliminate the need for baseload power plants.

Should a significant portion of the nation’s coal-fired plants be shuttered, we’ll need another source of energy to fill the void. Since it is a source without carbon emissions, maybe it’s time to take another look at nuclear power for generating base-load electricity. This, of course, would require deliberate public policy choices regarding fuel reprocessing and fuel storage technologies, in addition to a streamlined permitting process.

The EPA has issued a huge challenge to our industry. I believe that its goals can be achieved. However, we must recognize that every rate payer will share in the cost. Perhaps the EPA plan will become a first step in developing a much-needed national energy policy.

Let’s hope so, because one is long overdue. The country needs to find a balance between its energy needs and environmental concerns. Our quality of life and economy require energy. Citizens should be able to access all of the electricity they require and be able to do so at an affordable cost. They must also be assured their supply of electricity is reliable.

Additionally, the new EPA regulations restricting our use of coal will only have lasting benefits if other countries are encouraged to take similar steps to reduce greenhouse gas emissions.

 

Jim Krueger is the president and CEO of Freeborn-Mower Cooperative Services.